Date: 20000725
Docket: T-1259-97
OTTAWA, ONTARIO, THIS 25TH DAY OF JULY, 2000
PRESENT: THE HONOURABLE MR. JUSTICE McKEOWN
BETWEEN:
KINETIC CONSTRUCTION LTD.
Applicant
- and -
KNAPPETT CONSTRUCTION LTD., CCM CONSTRUCTION LTD.,
KINETIC CONSTRUCTION LTD.
Applicants
- and -
ATTORNEY GENERAL OF CANADA
Respondent
ORDER
The application for judicial review is allowed. The matter is returned to the Director to reconsider the question of what was a fair wage in each district during the period December 6, 1996 to the present in a manner not inconsistent with these reasons. Costs to the Applicant.
"W.P. McKeown"
____________________________
JUDGE
OTTAWA, ONTARIO
July 25, 2000
Date: 20000725
Docket: T-1259-97
BETWEEN:
KINETIC CONSTRUCTION LTD.
Applicant
- and -
KNAPPETT CONSTRUCTION LTD., CCM CONSTRUCTION LTD.,
KINETIC CONSTRUCTION LTD.
Applicants
- and -
ATTORNEY GENERAL OF CANADA
Respondent
REASONS FOR ORDER
McKEOWN J.
The Applicants seek judicial review of a decision made by the Regional Director of the Department of Labour in Vancouver ("Director"), wherein the Director determined the fair wages pursuant to section 4 of the Fair Wages and Hours Regulations , C.R.C. 1978, c-1015 (Regulations) and section 6 of the Fair Wages and Hours of Labour Act, R.S.C. 1985, c. L-3 ("the Act").
ISSUES
The issues are:
| 1) what, if any, deference should be shown to the Director under the Act and Regulations; |
| 2) what is the proper interpretation of the Fair Wages Act and Regulations with respect to: |
the meaning of fair wages in the Act and Regulations and
what are the powers and duties of the Director to set out the schedules on fair wages and;
| 3) whether the decision of the Director to impose fair wages as defined in the British Columbia Skills Development and Fair Wage Act, R.S.B.C. 1996, c. 427 amended (B.C. Act) is consistent with the definition under the federal legislation and is it consistent with the Director"s powers and duties. |
FACTS
The decision of the Director that is the subject of this application is dated February 3, 1995. The matter was subsequently re-visited by the Director on December 6, 1996. While there are in fact two decisions, for the purpose of this application they will be considered as one application as the dispute is the same for both. The commencement date for this judicial review is December 6, 1996.
This application is a consolidation of two previous applications. Both of the applications review a similar decision made by the Director. The 1997 application sought the review of a May 22, 1997 ruling that the wages paid to the workers, on a defined project at the Buoy Maintenance Building in Victoria, are those set out in the Fair Wage Minimum Rate Schedule pursuant to the B.C. Act.
In a letter dated December 6, 1996 (the decision), the Director advised that all projects which meet the conditions of the Skills Development and Fair Wage Act of British Columbia will be the subject to the hourly wage rate, not the benefit rate, as the fair wage. Furthermore, the decision stated that the province of British Columbia would be the district as set out in s. 4 of the federal regulations. The issue in the1997 application is whether the Director applied the federal regulations properly by using the wage schedule of the B.C. legislation and using the Province of British Columbia as the district. The Federal Regulations contemplate more than one district in a province. It is said that a portion of the province, such as greater Victoria or Vancouver Island should have been the district for the purposes of the Act and Regulations.
ANALYSIS
In deciding the standard of review or the amount of deference I should accord the decision of the Director, I start with the inquiry that Bastarache J. stated in Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1988] 1 S.C.R. 982 at page 1004:
| The central inquiry in determining the standard of review exercisable by a court of law is the legislative intent of the statute creating the tribunal whose decision is being reviewed. More specifically, the reviewing court must ask: "[W]as the question which the provision raises one that was intended by the legislators to be left to the exclusive decision of the "Board" (Pasiechnyk v. Saskatchewan (Workers" Compensation Board), [1997] 2 S.C.R. 890, at para. 18, per Sopinka J. |
| Since U.E.S., Local 298 v. Bibeault, [1988] 2 S.C.R. 1048, this Court has determined that the task of statutory interpretation requires a weighing of several different factors, none of which are alone dispositive, and each of which provides an indication falling on a spectrum of the proper level of deference to be shown the decision in question. This has been dubbed the "pragmatic and functional" approach. |
Both parties agree that I must decide what is the proper level of deference to be accorded to the decision of the Director in this case. The Applicant submits that the standard should be correctness and the Respondent submits that the appropriate standard is patently unreasonable. The Applicant states that this is a question of statutory interpretation, whereas the Respondent suggests that this is a question of supervising the discretion of an official where there is no limiting clause and the legislators intended that the Director should have wide discretion. However, having reviewed the Act, I cannot agree that the Director is accorded wide discretion. L"Heureux-Dubé J. stated at page 225 of Baker v. Canada (MCI) , [1999] 174 D.L.R. (4th) 235 at page 225:
| ... there is no easy distinction to be made between interpretation and the exercise of discretion; interpreting legal rules involves considerable discretion to clarify, fill in legislative gaps, and make choices among various options. |
The legislation and regulations do not provide the Director with an untrammelled right of discretion to determine a fair wage. Section 2 of the Act defines a fair wage as follows:
| "fair wages" means such wages as are generally accepted as current for competent workmen in the district in which the work is being performed for the character or class of work in which those workmen are respectively engaged, but shall in all cases be such wages as are fair and reasonable and shall in no case be less than the minimum hourly rate of pay prescribed by or pursuant to Part III of the Canada Labour Code ; |
Under the regulations in effect until September 14, 1999, when they were amended by SOR/99 - 362 (the Amended Regulations) the Director was provided with the following guidance. In section 5 the Director may prepare a schedule of the wage rates ascertained by him pursuant to subsection 4(1) or (2) but in no case shall the wage rates set out in the schedule be less than the minimum hourly rate prescribed by or pursuant to Part III of the Canada Labour Act. Subsections 4(1) and (2) read as follows:
| (1) The Director may, from wage surveys and from such other information respecting wages as he deems pertinent, ascertain the wage rates that in any district in which work under a contract is to be performed as generally accepted as current for competent workmen in the character or class of work in which workmen employed in work under a contract will be engaged. |
| (2) where in any district in which work contemplated by a contract is to be performed there are not wage rates generally accepted as current for the character or class of work in which workmen under the contract will be employed, the Director may, in the manner described in subsection (1), ascertain the wage rates that are generally accepted as current for competent workmen in any district from which workmen in the character or class of work required under the contract are expected to be drawn. |
The Amended Regulations in section 5 provide that the Regional Director shall prepare the schedule of wage rates that are established pursuant to section 4 for each district under that director"s authority, which shall be made available to the public. In the Amended Regulations it is recognized that there will be more than one district under the director"s authority. Section 4, now reads as follows:
| 4 (1) Subject to subsections (3) and (4), where there is a wage rate fixed, from time to time , by or under an Act of the legislature of a province that is applicable in the district in which the work is being performed for the character or class of work, and that rate is generally accepted as current, the fair wage shall be the provincial rate. |
| (2) Where there is no wage rate fixed by the provincial law for the district, the fair wage shall be equivalent to the average of salaries paid in that district for the character or class of work, based on statistical estimates produced by Statistics Canada from an occupational survey of the construction sector. |
| (3) Where the wage rates fixed by provincial law for a district are not generally accepted as current, the fair wages shall be the wage rates determined under subsection (2). |
| (4) In no case shall the fair wage rate be less than the minimum hourly rate fixed pursuant to Part III of the Canada Labour Code. |
It will be noted under section 4 of both the regulations and the Amended Regulations, the provincial rate is only the fair wage where that rate is generally accepted as current and the Director must make a determination as to whether the provincial rate is generally accepted as current. One can also note that when there is no wage rate fixed by provincial law for the district there is another formula that is to be put into effect. In my view, it is clear under the Act and Regulations and Amended Regulations that the Director is circumscribed in how he determines the fair wage.
Pushpanathan v. Canada (MCI), [1998] 1 S.C.R. 982 is authority for taking into account four factors in determining the standard of review. The first factor is the presence or absence of a privative clause and there is no privative clause in the present case.
The second factor is expertise. Bastarach J. stated in Pushpanathan, supra (at 1007):
| If a tribunal has been constituted with particular expertise with respect to achieving the aims of an Act, whether because of the specialized knowledge of its decision-makers, special procedure, or non-judicial means of implementing the Act, then a greater degree of deference will be accorded. |
There is no specialized knowledge required of the decision-maker, particularly under the new Regulations. The Director testified that he had no particular expertise in interpreting the legislation in question here and he spent only a small portion of his time dealing with these matters. Prior to 1995, the Director had conducted surveys and has not done any surveys since. Once the provincial rate was adopted, no further surveys were done. The B.C. government conducted surveys but they were never reviewed by the Director. Expertise is a relative concept, and I conclude the Director"s expertise in applying the Act and Regulations is at the lower end of the spectrum.
The third factor relates to the purpose of the Act as a whole and the provision in particular. The Respondent submitted that the Act and Regulations required a balance of different parties" interests. I do not see this balancing set out in the Act or in the Regulations by reference or otherwise, and it is certainly not included in the relevant sections.
The fourth factor relates again to the nature of the problem and I must decide whether it is a question of law or fact involved. Bastarach J. in Pushpanathan (at page 1010) stated:
| Where, however, other factors leave that intention ambiguous, courts should be less deferential of decisions which are pure determinations of law. |
Although the Regulations in section 6 contemplate that the Director will be notified of the nature of the proposed contracts before they are entered into or tendered, the Director indicated that this was not being done in practice. Furthermore, there is provision in subsection 6(2) that after the Director receives notice of a contract or tender, he shall send the contracting authority a schedule of wage rates appropriate for the proposed contract. Again, this is not being done. In my view, the Director must ensure compliance with these sections. The Amended Regulation is also clear that compliance is required. Accordingly, in the future the Director must comply with the provisions of subsections 6(1), (2) and (3).
Since the case before me involves economic regulation even though there is no overall scheme proposed under this legislation, in my view, the standard should be in the middle of the spectrum, reasonableness simpliciter. The interpretation of legislation to determine the meaning of fair wages invokes no broad relative expertise relating to statutory interpretation when the meaning is circumscribed as it is by the Act, Regulations and Amended Regulations. I would have been more inclined to recognize a broad relative expertise if the Director had chosen the wage rate after receiving wage surveys and such other information as he deemed pertinent to ascertain the wage rates but he looked at the provincial fair wage and did not compare it to determine if it was a generally accepted rate.
I now proceed to the second issue.
In order to determine whether the Director has applied the Act, Regulations and Amended Regulations in a reasonable way, it is necessary to review some of the relevant evidence concerning current wage rates in British Columbia. The primary evidence with respect to current wage rates in British Columbia is found in a report prepared by Professors Stanbury, Globerman and Vertinsky which stated that the provincial wage schedule is not the prevailing wage schedule in British Columbia. The Respondents did not file any material to contradict the Applicants" material in this respect. The Respondent relies on its interpretation of the Act and Regulations which in its view permits the Respondent to determine the wage rate based on the class or character of work in which workers are engaged. The Respondent submits the Director, by reason of section 2 of the Act and section 4 of the Regulations and Amended Regulations, can distinguish between public and private work. The Applicants are of the contrary view and say that the Act, Regulations and Amended Regulations do not contemplate a class distinction based upon public or private construction. The provincial wage rates are based on union rates for public construction projects over $250,000. On December 6, 1996, the Director advised that all projects which meet the conditions of the B.C. Act will be subject to the hourly wage rate, not the benefit rate, as the fair wage in the province of British Columbia. The whole of British Columbia was the named district.
Section 5 of the Regulations provides that the Regional Director may prepare a schedule of wage rates ascertained by him pursuant to subsection 4(1) or (2). Subsection 4(1) contemplates that the Director may, from wage surveys and from such other information respecting wages as he deems pertinent, ascertain the wage rates generally accepted as current for competent workmen in a particular district in which the work under the contract is to be performed. Under the Amended Regulations, fair wage shall be the provincial rate provided that the rate is generally accepted as current.
The definition of fair wages contains three elements. Fair wages are wages that a) are generally accepted as current for competent workmen; b) in the district in which work is being performed; c) for the character or class of work in which workmen are respectively engaged. The Act also provides that the wages are to be fair and reasonable but the regulations have not carried this concept forward. In my view, the first element of fair wages "generally accepted as current for competent workmen" simply refers to the prevailing or typical wage being paid to competent workers. In particular, the phrase "generally accepted as current" is clearly a reference to the current wages paid to workers by contractors under individual contracts of employment or, where applicable, collective agreements. The second element, b) above of the definition of fair wages, "in the district in which the work is being performed", is a reference to a geographical region containing the actual site of the construction project. There is no definition of "district" in the Act, Regulations or Amended Regulations. The Director has put forward that for purposes of his decision he will treat the district as the whole of British Columbia. However, the Regulations and Amended Regulations contemplate for the purpose of determining prevailing wages, a district must be a region in which the prevailing wages are fairly consistent or relatively uniform, and must be wages for competent workmen in such area.
In my view the third element, c) above of the definition, "the character or class of work in which the workmen were respectively engaged" must be interpreted as referring to the usual or typical classifications of construction trades, such as carpenter, plumber, electrician, and helper/labourer. This is borne out by the provincial wage schedule itself which refers to different trades receiving a certain minimum hourly rate. The Respondents are saying the Director is looking at the class of work as public construction, but there is nothing in the definition of fair wages in the Act, Regulations or Amended Regulations which states that the character or class of work is as defined by the owner. It is work in which workers are engaged. Workers do not engage in public construction. I also note that the Director could not distinguish between public carpentry and private carpentry. In summary "fair wages" under the Act means the prevailing wage rates in a particular geographical area where the work is being done and are paid to workers in each construction trade. There is a case, Independent Contractors and Business Association (British Columbia) v. British Columbia (1993), 6 B.C.L.R. (3rd) 177, where Justice Scarth addressed the same problem as is before me. At that time the B.C. legislation was the Wage (Public Construction) Act, R.S.B.C. 1979, c. 426, which used different language compared to the Federal Act. In this case, the three elements I have outlined were the same. The first element under the provincial Act was wages and benefits usually provided to workers. The second element was the geographical area where they are employed and the third element was for doing work of a particular character or class or performing a particular function. In that case, the question was whether the schedule adopted by the provincial government as a policy was consistent with the Act. Justice Scarth stated what the applicant sought was a declaration that the policy was in conflict with the Wage (Public Construction) Act, at 197:
| I think it is, in two essential respects. First, the wages and benefits payable under the Policy are the same for all geographical areas of the Province. The definition of "fair wages" in the Act, however, requires that wages and benefits paid to workers be: |
| ... reasonably equivalent to wages and benefits usually provided to workers for doing work of a particular character or class or performing a particular function in the geographical area where they are employed. |
| The evidence establishes wage rates vary throughout the Province. Thus, the Policy fails to take into account regional disparities. By imposing a uniform rate on contractors the Policy is in conflict with s. 2 of the Act which requires contractors to pay "fair wages" as defined by the Act. |
In my view, if I substitute Regulations for Policy, it is the same question as I have to answer here. The evidence before me is that the wage rates vary from region to region in British Columbia and the Director has not made any attempt to determine if the provincial schedule continues to be the generally accepted wage rate in the province or the particular district in question.
In summary, sections 4 through 7 of the Regulations impose specific procedures to be followed by the Director in preparing wage schedules which may be summarized as follows:
| A. The procedure begins with the contracting authority giving notice to the Director in writing of a proposed contract, including information respecting the nature of the contract and the classifications of employment likely to be required in the execution of the contract. (Subsection 6(1)) |
| B. Upon receipt of the written notice, the Director must either provide a schedule of wage rates appropriate for the proposed contract or expressly determine that such a schedule is unnecessary. (Subsection 6(2) and Section 7) |
| C. If the Director decides to furnish a schedule of wage rates, the wage rates contained in the schedule must be wage rates which the Director has ascertained are generally accepted as current for competent workmen in any district in which work under a contract is to be performed in the character or class of work in which workmen will be engaged. That is, the Director must ascertain wage rates that are consistent with the definition of fair wages contained in Section 2 of the Act and Section 4 of the Regulations. (Subsections 4(1) and 5) |
| D. In ascertaining the appropriate wage rates for the wage schedule, the Director may consider wage surveys or other information respecting wages that he deems pertinent. (Subsection 4(1)) |
| E. After the Director has ascertained the appropriate wage rates, he must furnish the schedule to the contracting authority. (Subsection 6(2)) |
It is clear from this procedure that the Director is not compelled to furnish wage schedules but if the Director elects to furnish wage schedules, the wage rates set out in these schedules must be the prevailing wage rates for each construction trade in the appropriate geographical area as mandated by the Act and Regulations. As I have stated, the decision of December 6, 1996 is inconsistent with the Act and Regulations in at least two respects:
| 1. The Director acted contrary to the requirements of section 6 of the Regulations by failing to ascertain a schedule of wage rates appropriate for each proposed contract. Instead the evidence confirms that the Director furnished a single schedule which was to be applied on all federal construction projects. |
| 2. The Director, in adopting the provincial wage schedule, acted contrary to the Act in failing or refusing to ascertain wage rates which were consistent with the definition of "fair wages" as required by the Act and Regulations. |
Under subsection 6(2) of the Regulations, the Director is supposed to issue a schedule of wage rates appropriate for the proposed contract. But all he has done as of December 6, 1996 is to issue a directive. He has not followed his statutory duty to ensure that the schedule contains wage rates which are current with the wage rates in the district concerned. Furthermore he has limited the class to public construction and there is no such class contemplated by the Act.
Having reviewed the legislation, I must now determine whether the Director"s interpretation of the Act and Regulations and Amended Regulations was reasonable, in accord with my determination of the proper standard of review, reasonableness simpliciter. In my view the Director has gone beyond a reasonable interpretation of the legislation in light of the limitations on his discretion contained therein. Accordingly, I have authority to set aside the decisions of the Director which were made in a manner which is inconsistent with the provisions of the Act or the Regulations granting jurisdiction to the Director. See: U.E.S., Local 298 v. Bibeault [1988] 2 S.C.R. 1048 and Pushpanathan v. Canada (Minister of Citizenship and Immigration), supra.
I must now move on to the third issue which is whether the decision of the Director to impose fair wages as defined in the British Columbia Skills Development and Fair Wage Act, R.S.B.C. 1996, c. 427 is consistent with the definition under the federal legislation and whether it is consistent with the Director"s powers and duties.
The Director"s decision is inconsistent with the Act and the Regulations in three respects. He failed to follow mandatory procedures in section 6 of the Regulations. He has chosen to issue a general directive and has not monitored whether the schedule of the B.C. Government is generally accepted as current in the district in which the work is being performed. Even under the Amended Regulations, he is still supposed to determine whether the wage rate is generally accepted as current. The Director"s decision and the Amended Regulations are also inconsistent with the Act, because the definition of fair wages in the Act contemplates the payment of wages generally accepted as current in the district. There must be separate geographical areas within the Province of British Columbia. For example, in the Independent Contractors v. British Columbia, case supra., Scarth J. found a difference between a heavily populated area such as Vancouver and the northeast rural area in the Province of British Columbia. Accordingly, the Director has not determined the prevailing wage in the district. Under the Amended Regulations, subsection 4(3) provides that where the rates are fixed by provincial law or district and are not accepted as current, the fair wage rates should be determined under subsection 2. Thus the Amended Regulations are even stronger than the Regulations with respect to there being more than one geographic area or district. The Director has also exercised his authority inconsistently with the Act in imposing the provincial wage schedules. The provincial wage schedules in B.C. are imposed pursuant to the B.C. Act, which does not provide any definition of fair wages. The Act provides that regulations can be made setting out the fair wage. There is no requirement that the wage be generally accepted as current. Unlike the B.C. legislation, the Director is not given general discretion to set such wages as he deems fit. He is limited to following the provincial wage rate in cases where that wage rate is generally accepted as current. The evidence in the case before me shows that the provincial wage rate is not the prevailing wage rate in British Columbia nor in many geographic regions thereof.
I note that the Director in his affidavit set out the factors he considered in making his decision that the wage rates for the federally funded construction projects should be province-wide. The Director considered the following factors: a) the need for employees working on federal construction contracts to receive a fair wage, b) the need for a level playing field for contractors bidding on federal construction contracts, c) the need for transparency in the bidding process, d) the provincial rates set the wage standard in the province for public construction and e) to adopt a wage policy which was uniform with other projects and in harmony with provincial rates and the cost of living surveys.
However, there is nothing in the Act or Regulations which enables the Director to consider the need for a level playing field. The Director admitted that this was not a rationale for determining what the wage schedule ought to be. He also admitted that the need for transparency in the bidding process was not a factor in determining fair wages. Certainly the two factors that are relevant are the provincial rates setting the wage standard in the province for public construction and to adopt a wage policy which was uniform with other projects and in harmony with but not identical to provincial rates. However, he received no surveys or other information which would enable him to determine if the provincial rates were generally accepted as current. Mr. Smelser, a Labour Market Economist employed with Human Resources Development, a department of the federal government, stated that he had no information to contradict the Stanbury Report referred to earlier. A review of the evidence before me would indicate that there is no evidence of differing opinions from those expressed in the Stanbury Report.
I therefore find that the decision of the Director to impose fair wages as defined in the B.C. Act is not consistent with the definition of fair wages under federal legislation and is not consistent with the Director"s powers and duties. The application for judicial review is allowed. The matter is returned to the Director to reconsider the question of what was a fair wage in each district during the period December 6, 1996 to the present in a manner not inconsistent with these reasons. Costs to the Applicant.
"W.P. McKeown"
__________________________
JUDGE
OTTAWA, ONTARIO
July 25, 2000
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